Vodafone Idea and Bharat Sanchar Nigam Limited, both telecom companies are trying to expand their business by increasing infrastructure. Building end-to-end telecom infrastructure, including fiber backhaul, towers and spectrum usage, is simply not affordable. A few days ago a report claimed that VI and BSNL are considering an infrastructure sharing deal. This means less money will be spent and the rollout will be faster.
Vodafone Idea is trying to raise money through debt to improve coverage and modernize the infrastructure. This will help Vodafone Idea in adding new users. At the same time, BSNL is also trying to launch a new 4G infrastructure across India and the company has already started with more than 1 lakh 4G sites.
If telecom companies come to the same thing about sharing infrastructure, it will mean huge cost savings for them. Along with this, they will get an edge in the market and will help in faster network rollout across the country. Telecom companies now want to increase coverage in urban towns as well as rural areas but the ROI (Return on Investment) of investing money to create rural telecom infrastructure is not attractive at all for the telecom companies.
By sharing infrastructure, both Vodafone Idea and BSNL will be able to reduce their costs in setting up infrastructure in rural areas and thus their ROI will improve significantly. However, regulatory approvals and agreement on the quality of services (QoS) of the company will have to be awaited, regulatory hurdles are a major factor here.
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